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Filing Military Taxes

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Filing Military Taxes

Filing military taxes Publication 54 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. Filing military taxes Tax questions. Filing military taxes Future Developments For the latest information about developments related to Publication 54, such as legislation enacted after it was published, go to www. Filing military taxes irs. Filing military taxes gov/pub54. Filing military taxes What's New Exclusion amount. Filing military taxes  The maximum foreign earned income exclusion is adjusted annually for inflation. Filing military taxes For 2013, the maximum exclusion has increased to $97,600. Filing military taxes See Limit on Excludable Amount under Foreign Earned Income Exclusion in chapter 4. Filing military taxes Housing expenses — base amount. Filing military taxes  The computation of the base housing amount (line 32 of Form 2555) is tied to the maximum foreign earned income exclusion. Filing military taxes The amount is 16 percent of the exclusion amount (computed on a daily basis), multiplied by the number of days in your qualifying period that fall within your 2013 tax year. Filing military taxes For 2013, this amount is $42. Filing military taxes 78 per day ($15,616 per year). Filing military taxes See Housing Amount under Foreign Housing Exclusion and Deduction in chapter 4. Filing military taxes Housing expenses — maximum amount. Filing military taxes  The amount of qualified housing expenses eligible for the housing exclusion and housing deduction has changed for some locations. Filing military taxes See Limit on housing expenses under Foreign Housing Exclusion and Deduction in chapter 4. Filing military taxes Filing requirements. Filing military taxes  Generally, the amount of income you can receive before you must file an income tax return has increased. Filing military taxes These amounts are shown in chapter 1 under Filing Requirements . Filing military taxes Self-employment tax rate. Filing military taxes  For 2013, the self-employment tax rate of 13. Filing military taxes 3% has increased to 15. Filing military taxes 3%. Filing military taxes The maximum amount of net earnings from self-employment that is subject to the social security part of the self-employment tax has increased to $113,700. Filing military taxes All net earnings are subject to the Medicare part of the tax. Filing military taxes For more information, see chapter 3. Filing military taxes IRA limitations for 2013. Filing military taxes . Filing military taxes  The 2013 contribution limit to an IRA has increased to $5,500 ($6,500 if age 50 or older). Filing military taxes You may be able to take an IRA deduction if you were covered by a retirement plan and your 2013 modified adjusted gross income (AGI) is less than $69,000 ($115,000 if married filing jointly or a qualifying widow(er)). Filing military taxes If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your 2013 modified AGI is less than $188,000. Filing military taxes See the Instructions for Form 1040 or the Instructions for Form 1040A for details and exceptions. Filing military taxes Reminders Figuring tax on income not excluded. Filing military taxes  If you claim the foreign earned income exclusion, the housing exclusion, or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions. Filing military taxes See the Instructions for Form 1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount of tax to enter on Form 1040, line 44. Filing military taxes If you must attach Form 6251 to your return, use the Foreign Earned Income Tax Worksheet provided in the Instructions for Form 6251. Filing military taxes Form 8938. Filing military taxes  If you had foreign financial assets in 2013, you may have to file Form 8938 with your return. Filing military taxes See Form 8938 in chapter 1. Filing military taxes Change of address. Filing military taxes  If you change your home mailing address, notify the Internal Revenue Service using Form 8822, Change of Address. Filing military taxes If you are changing your business address, use Form 8822-B, Change of Address or Responsible Party—Business. Filing military taxes Photographs of missing children. Filing military taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Filing military taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Filing military taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Filing military taxes Introduction This publication discusses special tax rules for U. Filing military taxes S. Filing military taxes citizens and resident aliens who work abroad or who have income earned in foreign countries. Filing military taxes If you are a U. Filing military taxes S. Filing military taxes citizen or resident alien, your worldwide income generally is subject to U. Filing military taxes S. Filing military taxes income tax, regardless of where you are living. Filing military taxes Also, you are subject to the same income tax filing requirements that apply to U. Filing military taxes S. Filing military taxes citizens or resident aliens living in the United States. Filing military taxes Expatriation tax provisions apply to U. Filing military taxes S. Filing military taxes citizens who have renounced their citizenship and long-term residents who have ended their residency. Filing military taxes These provisions are discussed in chapter 4 of Publication 519, U. Filing military taxes S. Filing military taxes Tax Guide for Aliens. Filing military taxes Resident alien. Filing military taxes   A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year. Filing military taxes Green card test. Filing military taxes You are a U. Filing military taxes S. Filing military taxes resident if you were a lawful permanent resident of the United States at any time during the calendar year. Filing military taxes This is known as the green card test because resident aliens hold immigrant visas (also known as green cards). Filing military taxes Substantial presence test. Filing military taxes You are considered a U. Filing military taxes S. Filing military taxes resident if you meet the substantial presence test for the calendar year. Filing military taxes To meet this test, you must be physically present in the United States on at least: 31 days during the current calendar year, and A total of 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year. Filing military taxes Example. Filing military taxes You were physically present in the United States on 120 days in each of the years 2011, 2012, and 2013. Filing military taxes To determine if you meet the substantial presence test for 2013, count the full 120 days of presence in 2013, 40 days in 2012 (1/3 of 120), and 20 days in 2011 (1/6 of 120). Filing military taxes Because the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2013. Filing military taxes   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. Filing military taxes Filing information. Filing military taxes    Chapter 1 contains general filing information, such as: Whether you must file a U. Filing military taxes S. Filing military taxes tax return, When and where to file your return, How to report your income if it is paid in foreign currency, How to treat a nonresident alien spouse as a U. Filing military taxes S. Filing military taxes resident, and Whether you must pay estimated tax. Filing military taxes Withholding tax. Filing military taxes    Chapter 2 discusses the withholding of income, social security, and Medicare taxes from the pay of U. Filing military taxes S. Filing military taxes citizens and resident aliens. Filing military taxes Self-employment tax. Filing military taxes    Chapter 3 discusses who must pay self-employment tax. Filing military taxes Foreign earned income exclusion and housing exclusion and deduction. Filing military taxes    Chapter 4 discusses income tax benefits that apply if you meet certain requirements while living abroad. Filing military taxes You may qualify to treat up to $97,600 of your income as not taxable by the United States. Filing military taxes You also may be able to either deduct part of your housing expenses from your income or treat a limited amount of income used for housing expenses as not taxable by the United States. Filing military taxes These benefits are called the foreign earned income exclusion and the foreign housing deduction and exclusion. Filing military taxes   To qualify for either of the exclusions or the deduction, you must have a tax home in a foreign country and earn income from personal services performed in a foreign country. Filing military taxes These rules are explained in chapter 4. Filing military taxes   If you are going to exclude or deduct your income as discussed above, you must file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Filing military taxes Exemptions, deductions, and credits. Filing military taxes    Chapter 5 discusses exemptions, deductions, and credits you may be able to claim on your return. Filing military taxes These are generally the same as if you were living in the United States. Filing military taxes However, if you choose to exclude foreign earned income or housing amounts, you cannot deduct or exclude any item or take a credit for any item that is related to the amounts you exclude. Filing military taxes Among the topics discussed in chapter 5 are: Exemptions, Contributions to foreign organizations, Foreign moving expenses, Contributions to individual retirement arrangements (IRAs), and Foreign taxes. Filing military taxes Tax treaty benefits. Filing military taxes    Chapter 6 discusses some benefits that are common to most tax treaties and explains how to get help if you think you are not receiving a treaty benefit to which you are entitled. Filing military taxes It also explains how to get copies of tax treaties. Filing military taxes How to get tax help. Filing military taxes    Chapter 7 is an explanation of how to get information and assistance from the IRS. Filing military taxes Questions and answers. Filing military taxes   Frequently asked questions and answers to those questions are presented in the back of the publication. Filing military taxes Comments and suggestions. Filing military taxes   We welcome your comments about this publication and your suggestions for future editions. Filing military taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Filing military taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Filing military taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Filing military taxes   You can send us comments from www. Filing military taxes irs. Filing military taxes gov/formspubs/. Filing military taxes Click on “More Information” and then on “Comment on Tax Forms and Publications. Filing military taxes ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Filing military taxes Ordering forms and publications. Filing military taxes   Visit www. Filing military taxes irs. Filing military taxes gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Filing military taxes Internal Revenue Service 1201 N. Filing military taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Filing military taxes   If you have a tax question, check the information available on IRS. Filing military taxes gov or call 1-800-TAX–FORM (1-800-829-1040). Filing military taxes We cannot answer tax questions sent to either of the above addresses. Filing military taxes Prev  Up  Next   Home   More Online Publications
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Filing military taxes 3. Filing military taxes   Claiming the Special Depreciation Allowance Table of Contents Introduction What Is Qualified Property?Qualified Reuse and Recycling Property Qualified Cellulosic Biofuel Plant Property Qualified Disaster Assistance Property Certain Qualified Property Acquired After December 31, 2007 Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance How Much Can You Deduct? How Can You Elect Not To Claim an Allowance? When Must You Recapture an Allowance? Introduction You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. Filing military taxes The allowance applies only for the first year you place the property in service. Filing military taxes For qualified property placed in service in 2013, you can take an additional 50% special allowance. Filing military taxes The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. Filing military taxes This chapter explains what is qualified property. Filing military taxes It also includes rules regarding how to figure an allowance, how to elect not to claim an allowance, and when you must recapture an allowance. Filing military taxes Corporations can elect to accelerate certain minimum tax credits in lieu of claiming the special depreciation allowance for eligible qualified property. Filing military taxes See Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance , later. Filing military taxes See chapter 6 for information about getting publications and forms. Filing military taxes What Is Qualified Property? Your property is qualified property if it is one of the following. Filing military taxes Qualified reuse and recycling property. Filing military taxes Qualified cellulosic biofuel plant property. Filing military taxes Qualified disaster assistance property. Filing military taxes Certain qualified property acquired after December 31, 2007. Filing military taxes The following discussions provide information about the types of qualified property listed above for which you can take the special depreciation allowance. Filing military taxes Qualified Reuse and Recycling Property You can take a 50% special depreciation allowance for qualified reuse and recycling property. Filing military taxes Qualified reuse and recycling property is any machinery or equipment (not including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined in section 168(m)(3)(B) of the Internal Revenue Code). Filing military taxes Qualified reuse and recycling property also includes software necessary to operate such equipment. Filing military taxes The property must meet the following requirements. Filing military taxes The property must be depreciated under MACRS. Filing military taxes The property must have a useful life of at least 5 years. Filing military taxes The original use of the property must begin with you after August 31, 2008. Filing military taxes You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008. Filing military taxes The property must be placed in service for use in your trade or business after August 31, 2008. Filing military taxes Excepted Property Qualified reuse and recycling property does not include any of the following. Filing military taxes Any rolling stock or other equipment used to transport reuse or recyclable materials. Filing military taxes Property required to be depreciated using the Alternative Depreciation System (ADS). Filing military taxes For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Filing military taxes Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. Filing military taxes Property for which you elected not to claim any special depreciation allowance (discussed later). Filing military taxes Property placed in service and disposed of in the same tax year. Filing military taxes Property converted from business use to personal use in the same tax year acquired. Filing military taxes Property converted from personal use to business use in the same or later tax year may be qualified reuse and recycling property. Filing military taxes Qualified Cellulosic Biofuel Plant Property You can take a 50% special depreciation allowance for qualified cellulosic biofuel plant property. Filing military taxes Cellulosic biofuel is any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis. Filing military taxes Examples include bagasse (from sugar cane), corn stalks, and switchgrass. Filing military taxes The property must meet the following requirements. Filing military taxes The property is used in the United States solely to produce cellulosic biofuel. Filing military taxes The original use of the property must begin with you after December 20, 2006. Filing military taxes You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after December 20, 2006, with no binding written contract for acquisition in effect before December 21, 2006. Filing military taxes The property must be placed in service for use in your trade or business or for the production of income after October 3, 2008, and before January 3, 2013. Filing military taxes Note. Filing military taxes For property placed in service after January 2, 2013, and before January 1, 2014, you can take a 50% special depreciation allowance for qualified second generation biofuel plant property that is used solely in the United States to produce second generation biofuel (as defined in section 40(b)(6)(E)). Filing military taxes The other requirements for qualified second generation biofuel plant property to be eligible for the special depreciation allowance are identical to the requirements discussed for Qualified Cellulosic Biofuel Plant Property above. Filing military taxes Special Rules Sale-leaseback. Filing military taxes   If you sold qualified cellulosic biofuel plant property you placed in service after October 3, 2008, and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Filing military taxes   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before December 21, 2006. Filing military taxes Syndicated leasing transactions. Filing military taxes   If qualified cellulosic biofuel plant property is originally placed in service by a lessor after October 3, 2008, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Filing military taxes   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. Filing military taxes Excepted Property Qualified cellulosic biofuel plant property does not include any of the following. Filing military taxes Property placed in service and disposed of in the same tax year. Filing military taxes Property converted from business use to personal use in the same tax year it is acquired. Filing military taxes Property converted from personal use to business use in the same or later tax year may be qualified cellulosic biomass ethanol plant property. Filing military taxes Property required to be depreciated using the Alternative Depreciation System (ADS). Filing military taxes For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Filing military taxes Property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of the Internal Revenue Code. Filing military taxes Property for which you elected not to claim any special depreciation allowance (discussed later). Filing military taxes Property for which a deduction was taken under section 179C for certain qualified refinery property. Filing military taxes Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. Filing military taxes Qualified Disaster Assistance Property You can take a 50% special depreciation allowance for qualified disaster assistance property placed in service in federally declared disaster areas in which the disaster occurred in 2009. Filing military taxes A list of the federally declared disaster areas is available at the FEMA website at www. Filing military taxes fema. Filing military taxes gov. Filing military taxes Your property is qualified disaster assistance property if it meets the following requirements. Filing military taxes The property is nonresidential real property or residential real property placed in service before January 1, 2014, in a federally declared disaster area in which the disaster occurred in 2009. Filing military taxes You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) on or after the applicable disaster date, with no binding written contract for the acquisition in effect before the applicable disaster date. Filing military taxes The property must rehabilitate property damaged, or replace property destroyed or condemned, as a result of the applicable federally declared disaster. Filing military taxes The property must be similar in nature to, and located in the same county as, the rehabilitated or replaced property. Filing military taxes The original use of the property within the applicable disaster area must have begun with you on or after the applicable disaster date. Filing military taxes The property is placed in service by you on or before the date which is the last day of the fourth calendar year. Filing military taxes Substantially all (80% or more) of the use of the property must be in the active conduct of your trade or business in a federally declared disaster area, occurring in 2009. Filing military taxes It is not excepted property (explained later in Excepted Property ). Filing military taxes Special Rules Sale-leaseback. Filing military taxes   If you sold qualified disaster assistance property you placed in service after the applicable disaster date and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Filing military taxes   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before the applicable disaster date. Filing military taxes Syndicated leasing transactions. Filing military taxes   If qualified disaster assistance property is originally placed in service by a lessor after the applicable disaster date, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Filing military taxes   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. Filing military taxes Excepted Property Qualified disaster assistance property does not include any of the following. Filing military taxes Property required to be depreciated using the Alternative Depreciation System (ADS). Filing military taxes For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Filing military taxes Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103 of the Internal Revenue Code. Filing military taxes Any qualified revitalization building (defined later) placed in service before January 1, 2010, for which you have elected to claim a commercial revitalization deduction for qualified revitalization expenditures. Filing military taxes Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. Filing military taxes Any property for which the special allowance under section 168(k) or section 1400N(d) of the Internal Revenue Code applies. Filing military taxes Property for which you elected not to claim any special depreciation allowance (discussed later). Filing military taxes Property placed in service and disposed of in the same tax year. Filing military taxes Property converted from business use to personal use in the same tax year acquired. Filing military taxes Property converted from personal use to business use in the same or later tax year may be qualified disaster assistance property. Filing military taxes Any gambling or animal racing property (defined later). Filing military taxes Qualified revitalization building. Filing military taxes   This is a commercial building and its structural components that you placed in service in a renewal community before January 1, 2010. Filing military taxes If the building is new, the original use of the building must begin with you. Filing military taxes If the building is not new, you must substantially rehabilitate the building and then place it in service. Filing military taxes For more information, including definitions of substantially rehabilitated building and qualified revitalization expenditure, see section 1400I(b) of the Internal Revenue Code. Filing military taxes Gambling or animal racing property. Filing military taxes   Gambling or animal racing property includes the following personal and real property. Filing military taxes Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing. Filing military taxes Any real property determined by square footage (other than any portion that is less than 100 square feet) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing. Filing military taxes Certain Qualified Property Acquired After December 31, 2007 You can take a 50% special depreciation deduction allowance for certain qualified property acquired after December 31, 2007. Filing military taxes Your property is qualified property if it meets the following requirements. Filing military taxes It is one of the following types of property. Filing military taxes Tangible property depreciated under MACRS with a recovery period of 20 years or less. Filing military taxes Water utility property. Filing military taxes Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. Filing military taxes (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Filing military taxes ) Qualified leasehold improvement property (defined under Qualified leasehold improvement property later). Filing military taxes You must have acquired the property after December 31, 2007, with no binding written contract for the acquisition in effect before January 1, 2008. Filing military taxes The property must be placed in service for use in your trade or business or for the production of income before January 1, 2014 (before January 1, 2015, for certain property with a long production period and certain aircraft (defined next)). Filing military taxes The original use of the property must begin with you after December 31, 2007. Filing military taxes It is not excepted property (explained later in Excepted property). Filing military taxes Qualified leasehold improvement property. Filing military taxes    Generally, this is any improvement to an interior part of a building that is nonresidential real property, if all the following requirements are met. Filing military taxes The improvement is made under or according to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Filing military taxes That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Filing military taxes The improvement is placed in service more than 3 years after the date the building was first placed in service by any person. Filing military taxes The improvement is section 1250 property. Filing military taxes See chapter 3 in Publication 544, Sales and Other Dispositions of Assets, for the definition of section 1250 property. Filing military taxes   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Filing military taxes The enlargement of the building. Filing military taxes Any elevator or escalator. Filing military taxes Any structural component benefiting a common area. Filing military taxes The internal structural framework of the building. Filing military taxes   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. Filing military taxes However, a lease between related persons is not treated as a lease. Filing military taxes Related persons. Filing military taxes   For this purpose, the following are related persons. Filing military taxes Members of an affiliated group. Filing military taxes An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. Filing military taxes A corporation and an individual who directly or indirectly owns 80% or more of the value of the outstanding stock of that corporation. Filing military taxes Two corporations that are members of the same controlled group. Filing military taxes A trust fiduciary and a corporation if 80% or more of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. Filing military taxes The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Filing military taxes The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. Filing military taxes A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. Filing military taxes Two S corporations, and an S corporation and a regular corporation, if the same persons own 80% or more of the value of the outstanding stock of each corporation. Filing military taxes A corporation and a partnership if the same persons own both of the following. Filing military taxes 80% or more of the value of the outstanding stock of the corporation. Filing military taxes 80% or more of the capital or profits interest in the partnership. Filing military taxes The executor and beneficiary of any estate. Filing military taxes Long Production Period Property To be qualified property, long production period property must meet the following requirements. Filing military taxes It must meet the requirements in (2)-(5), above. Filing military taxes The property has a recovery period of at least 10 years or is transportation property. Filing military taxes Transportation property is tangible personal property used in the trade or business of transporting persons or property. Filing military taxes The property is subject to section 263A of the Internal Revenue Code. Filing military taxes The property has an estimated production period exceeding 1 year and an estimated production cost exceeding $1,000,000. Filing military taxes Noncommercial Aircraft To be qualified property, noncommercial aircraft must meet the following requirements. Filing military taxes It must meet the requirements in (2)-(5), above. Filing military taxes The aircraft must not be tangible personal property used in the trade or business of transporting persons or property (except for agricultural or firefighting purposes). Filing military taxes The aircraft must be purchased (as discussed under Property Acquired by Purchase in chapter 2 ) by a purchaser who at the time of the contract for purchase, makes a nonrefundable deposit of the lesser of 10% of the cost or $100,000. Filing military taxes The aircraft must have an estimated production period exceeding four months and a cost exceeding $200,000. Filing military taxes Special Rules Sale-leaseback. Filing military taxes   If you sold qualified property you placed in service after December 31, 2007, and leased it back within 3 months after you originally placed in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Filing military taxes   The property will not qualify for the special depreciation allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before January 1, 2008. Filing military taxes Syndicated leasing transactions. Filing military taxes   If qualified property is originally placed in service by a lessor after December 31, 2007, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Filing military taxes   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of the last sale if the property is sold within 3 months after the final unit is placed in service and the period between the time the first and last units are placed in service does not exceed 12 months. Filing military taxes Excepted Property Qualified property does not include any of the following. Filing military taxes Property placed in service and disposed of in the same tax year. Filing military taxes Property converted from business use to personal use in the same tax year acquired. Filing military taxes Property converted from personal use to business use in the same or later tax year may be qualified property. Filing military taxes Property required to be depreciated under the Alternative Depreciation System (ADS). Filing military taxes This includes listed property used 50% or less in a qualified business use. Filing military taxes For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Filing military taxes Qualified restaurant property (as defined in section 168(e)(7) of the Internal Revenue Code). Filing military taxes Qualified retail improvement property (as defined in section 168(e)(8) of the Internal Revenue Code). Filing military taxes Property for which you elected not to claim any special depreciation allowance (discussed later). Filing military taxes Property for which you elected to accelerate certain credits in lieu of the special depreciation allowance (discussed next). Filing military taxes Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 2 extension property (as defined in section 168(k)(4)(I)(iv)), unless the corporation made an election not to apply the section 168(k)(4) election to round 2 extension property for its first tax year ending after December 31, 2010. Filing military taxes For 2013, round 2 extension property generally is long production period and noncommercial aircraft if acquired after March 31, 2008, and placed in service after December 31, 2012, but before January 1, 2014. Filing military taxes An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 3 extension property (as defined in section 168(k)(4)(J)(iv)), unless the corporation makes an election not to apply the section 168(k)(4) election to round 3 extension property. Filing military taxes If a corporation did not make a section 168(k)(4) election for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, the corporation may elect for its first tax year ending after December 31, 2012, to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for only round 3 extension property. Filing military taxes If you make an election to accelerate these credits in lieu of claiming the special depreciation allowance for eligible property, you must not take the 50% special depreciation allowance for the property and must depreciate the basis in the property under MACRS using the straight line method. Filing military taxes See Which Depreciation Method Applies in chapter 4 . Filing military taxes Once made, the election cannot be revoked without IRS consent. Filing military taxes Additional guidance. Filing military taxes   For additional guidance on the election to accelerate the research or minimum tax credit in lieu of claiming the special depreciation allowance, see Rev. Filing military taxes Proc. Filing military taxes 2008-65 on page 1082 of Internal Revenue Bulletin 2008-44, available at www. Filing military taxes irs. Filing military taxes gov/pub/irs-irbs/irb08-44. Filing military taxes pdf, Rev. Filing military taxes Proc. Filing military taxes 2009-16 on page 449 of Internal Revenue Bulletin 2009-06, available at www. Filing military taxes irs. Filing military taxes gov/pub/irs-irbs/irb09-06. Filing military taxes pdf, and Rev. Filing military taxes Proc. Filing military taxes 2009-33 on page 150 of Internal Revenue Bulletin 2009-29, available at www. Filing military taxes irs. Filing military taxes gov/pub/irs-irbs/irb09-29. Filing military taxes pdf. Filing military taxes Also, see Form 3800, General Business Credit; Form 8827, Credit for Prior Year Minimum Tax — Corporations; and related instructions. Filing military taxes   Additional guidance regarding the election to accelerate the minimum tax credit in lieu of claiming the special depreciation allowance for round 2 extension property and round 3 extension property may also be available in later Internal Revenue Bulletins available at www. Filing military taxes irs. Filing military taxes gov/irb. Filing military taxes How Much Can You Deduct? Figure the special depreciation allowance by multiplying the depreciable basis of qualified reuse and recycling property, qualified cellulosic biofuel plant property, qualified disaster assistance property, and certain qualified property acquired after December 31, 2007, by 50%. Filing military taxes For qualified property other than listed property, enter the special allowance on line 14 in Part II of Form 4562. Filing military taxes For qualified property that is listed property, enter the special allowance on line 25 in Part V of Form 4562. Filing military taxes If you place qualified property in service in a short tax year, you can take the full amount of a special depreciation allowance. Filing military taxes Depreciable basis. Filing military taxes   This is the property's cost or other basis multiplied by the percentage of business/investment use, reduced by the total amount of any credits and deductions allocable to the property. Filing military taxes   The following are examples of some credits and deductions that reduce depreciable basis. Filing military taxes Any section 179 deduction. Filing military taxes Any deduction for removal of barriers to the disabled and the elderly. Filing military taxes Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Filing military taxes Basis adjustment to investment credit property under section 50(c) of the Internal Revenue Code. Filing military taxes   For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Filing military taxes   For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . Filing military taxes For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . Filing military taxes Depreciating the remaining cost. Filing military taxes   After you figure your special depreciation allowance for your qualified property, you can use the remaining cost to figure your regular MACRS depreciation deduction (discussed in chapter 4 . Filing military taxes Therefore, you must reduce the depreciable basis of the property by the special depreciation allowance before figuring your regular MACRS depreciation deduction. Filing military taxes Example. Filing military taxes On November 1, 2013, Tom Brown bought and placed in service in his business qualified property that cost $450,000. Filing military taxes He did not elect to claim a section 179 deduction. Filing military taxes He deducts 50% of the cost ($225,000) as a special depreciation allowance for 2013. Filing military taxes He uses the remaining $225,000 of cost to figure his regular MACRS depreciation deduction for 2013 and later years. Filing military taxes Like-kind exchanges and involuntary conversions. Filing military taxes   If you acquire qualified property in a like-kind exchange or involuntary conversion, the carryover basis of the acquired property is eligible for a special depreciation allowance. Filing military taxes After you figure your special allowance, you can use the remaining carryover basis to figure your regular MACRS depreciation deduction. Filing military taxes In the year you claim the allowance (the year you place in service the property received in the exchange or dispose of involuntarily converted property), you must reduce the carryover basis of the property by the allowance before figuring your regular MACRS depreciation deduction. Filing military taxes See Figuring the Deduction for Property Acquired in a Nontaxable Exchange , in chapter 4 under How Is the Depreciation Deduction Figured . Filing military taxes The excess basis (the part of the acquired property's basis that exceeds its carryover basis) is also eligible for a special depreciation allowance. Filing military taxes How Can You Elect Not To Claim an Allowance? You can elect, for any class of property, not to deduct any special allowances for all property in such class placed in service during the tax year. Filing military taxes To make an election, attach a statement to your return indicating what election you are making and the class of property for which you are making the election. Filing military taxes When to make election. Filing military taxes   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Filing military taxes   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Filing military taxes Attach the election statement to the amended return. Filing military taxes On the amended return, write “Filed pursuant to section 301. Filing military taxes 9100-2. Filing military taxes ” Revoking an election. Filing military taxes   Once you elect not to deduct a special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Filing military taxes A request to revoke the election is a request for a letter ruling. Filing military taxes If you elect not to have any special allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. Filing military taxes When Must You Recapture an Allowance? When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. Filing military taxes See When Do You Recapture MACRS Depreciation in chapter 4 or more information. Filing military taxes Recapture of allowance deducted for qualified GO Zone property. Filing military taxes   If, in any year after the year you claim the special depreciation allowance for qualified GO Zone property (including specified GO Zone extension property), the property ceases to be used in the GO Zone, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Filing military taxes For additional guidance, see Notice 2008-25 on page 484 of Internal Revenue Bulletin 2008-9. Filing military taxes Qualified cellulosic biomass ethanol plant property and qualified cellulosic biofuel plant property. Filing military taxes   If, in any year after the year you claim the special depreciation allowance for any qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, the property ceases to be qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Filing military taxes Recapture of allowance for qualified Recovery Assistance property. Filing military taxes   If, in any year after the year you claim the special depreciation allowance for qualified Recovery Assistance property, the property ceases to be used in the Kansas disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Filing military taxes For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. Filing military taxes Recapture of allowance for qualified disaster assistance property. Filing military taxes   If, in any year after the year you claim the special depreciation allowance for qualified disaster assistance property, the property ceases to be used in the applicable disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Filing military taxes   For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. Filing military taxes Prev  Up  Next   Home   More Online Publications